Nike announced that it will cease making and selling products for the Livestrong Foundation at the end of this year.

 

The move to halt production of the Livestrong brand comes as no surprise, especially considering the clothing giant terminated its contract in the fall of 2012 with controversial cyclist Lance Armstrong, who was the founder and face of the Livestrong brand. 

 

Nike has been distancing itself from the notorious cyclist since the United States Anti-Doping Agency released a slew of information and reports in October outlining the extensive steroid use and doping allegations made against Armstrong when he won the Tour De France cycling events seven years in a row from 1999 to 2005. 

 

The U.S. Anti-Doping Agency banned Armstrong from competing in cycling events for life and stripped the former champion of the titles he won during his 14-year career. 

Armstrong, a cancer survivor, founded the Livestrong brand in 1997, but stepped down as chairman of the charity shortly after the October reports were released. Armstrong claimed he was removing his name from the foundation to spare “the foundation from any negative effects as a result of the stigma and controversy surrounding my career.”

Nike has been a staunch supporter of the Livestrong Foundation, which provides free resources and support services, as well as an assortment of programs to help people with cancer. Over the last decade or so, with public support from Armstrong, Nike raised over $100 million for the charity and has sold roughly 88 million of the signature Livestrong yellow wristbands. 

 

Nike announced in a statement that this year’s holiday line will be its last offered under the Livestrong name; however, the company also claimed it will continue to support the foundation by providing funds to it in a direct manner. Besides Nike, other companies, such as Radio Shack and Anheuser-Busch, also terminated their relationship with Lance Armstrong. 

 

The Livestrong Foundation announced in a statement that it is grateful to Nike for their time, creative drive, and resources it brought to the longstanding partnership.  

 

 

Source: sec.gov

 

The S.E.C. charged NASDAQ with a securities laws violation resulting from its poor decision-making during the initial public offering and secondary trading of Facebook shares. In response to the charges, NASDAQ has agreed to settle and pay a $10 million penalty, which represents the largest fine filed against the market exchange. 

In the United States, exchanges have an obligation to guarantee that their processes, systems, and contingency plans are effective and adequate to manage an IPO without disrupting the market. According to the agency’s order, despite widespread anticipation that the IPO would be among the most prolific in history with regards to the number of investors participating, a design limitation in the exchange’s platform to match IPO sell and buy orders brought significant disruption to the IPO. Following the disruption, NASDAQ then undertook a series of poor decisions that ultimately led to the rules violations. 

 

According to the agency’s order, several members of the exchange’s senior leadership team undertook a “code blue” conference call and decided not to delay the start of secondary trading in Facebook with the exception that they had righted the system error by removing lines of computer code. However, the team did not understand the root of the problem, and the market’s decision to initiate trading before understanding the problem caused a series of violations, including the exchange’s fundamental rule governing the time/price priority for executing trade orders. This problem caused in excess of 30,000 Facebook orders to remain stuck in the exchange’s system for more than two hours when said shares should have been promptly cancelled or executed. 

“The action against NASDAQ describes how poorly designed systems not only disrupted one of the most significant IPOS in history, but produced pervasive and substantial violations of our market’s fundamental rules,” said George Canellos, the Co-Director of the SEC’s Enforcement Division. 

 

Additionally, NASDAQ further violated its rules when it took a short position in Facebook in an unauthorized account. The exchange’s rules do not allow it to use an error account for any reason; NASDAQ subsequently covered the short position for a profit of roughly $10.8 million, which is also in violation of its rules. The exchange further violated its rules in a few other ways during the opening of trading following the end of the display-only period for the company and following a substantial freeze in Zynga trading. 

 

 

Source: SEC.GOV

 

Mortgage rates in the U.S. have hit their highest level in more than a year, making homes more expensive for purchases who seek to finance their new abodes. 

The rates on 30-year-fixed mortgages jumped nearly .25 percent to 3.81 percent this week, according to mortgage lending giant Freddie Mac. This is an increase of 15 percent from the record low of 3.31 percent set during November of 2012 and the highest rate since May of 2012. The 30-year rate dropped as low as 3.35 percent in early May. 

 

The rates for 15-year fixed mortgages also spiked t0 2.98 percent, representing an increase of .21 percent. 

 

Prospective home buyers unhappy with these increased rates can blame it on Ben Bernanke, the chairman of the U.S. Federal Reserve. According to Keith Gumbinger, an executive with a premiere mortgage information company, “Bernanke’s comments left the impression that the central bank’s stimulus policy might start to be pulled back, perhaps as early as this September,” said Gumbinger. “This announcement influenced the spike in interest rates as investors worked quickly to adjust their positions.”

The stimulus policy, in which the Federal Reserve purchases up as much as $85 billion a month in U.S. treasuries and mortgage backed securities, has kept interest rates close to zero by providing a willing buyer for loans. If the central bank pulls the reins on their purchases, buyers will likely demand higher yields to pick up the slack, which will push interest rates up.

 

Bond yields, which are utilized to track mortgage rates, have risen even faster than mortgage rates. The 10-year Treasury is currently at 2.12 percent or .45 percentage points above its April level. 

 

As rates continue to rise, the number of loan refinancings will invariably decline. Refinancing applications dropped by 12 percent week over week, representing the largest single-week drop in 2013. That said, mortgage rates will probably have to climb much righter to have a significant impact on buyers. 

 

Mortgage rate increases over the past month have only added roughly $20 to monthly mortgage payments for every $100,000 borrowed. However, the increase in rates ultimately limits how much buyers will bid on homes, which in turn, dampens home values. 

 

 

Source: whitehouse.gov

Roughly 11 million Americans depend on federal disability payments; however, the system is on the verge of running out of money.

According to a government report, the Social Security Disability Insurance program is expected to run out of money in its trust fund sometime in 2016, years before both the Social Security and Medicaid programs. If this happens, the revenues coming into the program would only be enough to cover roughly 80 percent of the payments owed to the disabled and their families.

The trustees of Medicare and Social Security will release an update on the status of the disability program later this week. The annual report will also offer new estimates for the exhaustion of Medicare’s hospital fund, and of Social Security’s retirement fund, which is currently set to run out of funds in 2035.

Although the disability program is the smallest of the three, it will be the first program that Congress has to address. That said, there is not much agreement regarding the entitlement reform in Washington these days. Attempts to cut Medicare spending have been nothing short of futile.

The Social Security actuaries have developed two ways to bring stability to the disability program. The easiest solution and one legislators have agreed to in recent years, is to divert a larger percentage of the Social Security payroll tax to the disability program and away from the general retirement initiative.

Currently, the combined rate paid by U.S. employers and workers is 12.4 percent. The disability program’s rate is 1.8 percent, and the retirement system’s rate is an overwhelming 10.6 percent. Congress has the ability to authorize a larger share moving toward disability to 2.6 percent for two years and slowly wane this figure to 1.8 percent by 2030. This increase would allow the disability fund to remain solvent until roughly 2033; however, it would cut the retirement system’s lifespan by two years.

The other means, which is highly controversial, would be to increase the disability portion paid by employers and workers by 0.2 percent each. This increase would keep the program running for 75 years; however, there is little desire among legislators to undertake a tax increase.

There are a variety of reasons why the number of Americans collecting disability payments has skyrocketed to roughly 11 million from 8.7 million in 2007. The aging of the baby boomers is one of the primary drivers, along with more women entering the workforce. That said, many argue that Americans are taking advantage of the system, claiming it is too easy to procure benefits under the program.

Regardless of how we got here if Congress does not take action, the disabled population will have to make due with smaller payments.

Source: Congresional Budget Office

The SEC today charged a Washington-based commercial truck manufacturer for a number of accounting deficiencies that clouded the company’s financial reporting to investors during the financial crisis. The SEC alleges that PACCAR’s accounting controls included ineffective policies and procedures that kept the business from adhering to various accounting laws and rules. The company failed to report the operating results of its aftermarket business separately from its truck sales business as mandated under segment reporting rules, which are established to ensure that investors procure the same insight into a business as its primary executives.

PACCAR and one of its subsidiaries also failed to offer complete information regarding their respective loan and lease portfolios, and the company also overstated some lease and loan originations and collections and two of its foreign subsidiaries in its statement of cash flows. Both PACCAR and its subsidiary agreed to settle these charges.

“Companies are required to diligently monitor their internal accounting systems to ensure that the information presented is consistent and accurate with the relevant accounting guidance,” said Michael Dicke, the Associate Regional Director of the agency’s San Francisco Office. “The deficient procedures and controls at PACCAR caused glaring inconsistencies in its reporting and kept regulators and investors from seeing the company through the eyes of the company’s management personnel.”

According to the complaint, PACCAR is a Fortune 200 company that manufactures, designs, and distributes trucks and aftermarket parts that are sold under the Kenworth, DAF, and Peterbilt nameplates. From 2008 through 2012, PACCAR did not report the results for its parts business as a separate entity from its truck sales business. For instance, the company’s 2009 annual report showed $68 million in income prior to taxation for its truck segment; however, board materials and documents reviewed by senior executives revealed that the trucks business encountered a $474 million loss and the parts business procured a $542 million profit. By at least 2008, the company should have been reporting its aftermarket business as a separate entity in its filings, but failed to do so until the 4^th quarter of last year. 

 

Source: SEC.gov

The agency suspended trading activities of 61 empty shell businesses that are delinquent in their public filing and no longer in business based on an evaluation by the agency’s Microcap Fraud Working Group. Because microcap companies are rarely traded, once they become dormant they are susceptible to being taken over by fraudsters who falsely pump-up the stock to depict it as a healthy business and coerce investors into illegal pump and dump schemes.

In this review of microcap stocks, the SEC identified these shell companies in at least 17 states and one foreign nation. By suspending trading in these businesses, they are required to provide updated financial information to prove they are still up and running. This requirement essentially renders these businesses useless to fraudsters because they are no longer flying under the radar.

“Fraudsters crave empty shell companies that they use to conduct pump and dump schemes and procure illicit trading profits by defrauding unsuspecting investors,” said Andrew Cereseny, the Co-Director of the SEC’s Division of Enforcement. “The SEC will aggressively freeze trading in these shell companies to take away a crucial instrument of their trade and to rid our markets of fraudulent activities.”

Pump and dump schemes are common types of fraud involving these empty shell businesses. Perpetrators acting out these schemes will tout a thinly-traded microcap company through misleading and false statements regarding the company. Perpetrators then purchase the stock at a low price before driving the price higher by creating the appearance of activity and drawing investor interest. They then dump the stock for a significant profit by selling it to the market at a higher price once investors have bought into it.

“When a company ceases its filings and investors no longer have access to current information, there is no reason for that shell to remain exposed in our markets. Under this initiative, we are committed to identifying significant risks in the market and removing them to protect investors,” said Christopher Ehrman, the Coordinator of the agency’s Microcap Fraud Group.

Source: sec.gov

 

The fervent debate has lost most of its steam as the United States Supreme Court has rejected the premiere legal challenge and November’s presidential election snuffer out the opposition’s hopes for a late reversal. Come the New Year, every American in the country, will be required to carry health insurance or a pay a fine, as one of the last pieces of Obamacare falls into place. 

 

That said, for the 6 million residents of Massachusetts, the implementation of Obamacare will not mean a whole lot. In 2006 then-governor Mitt Romney signed a health-reform initiative that instituted a similar insurance mandate with strict rules for when employers must provide plans and the blueprint for a government online insurance exchange or marketplace. This plan, which was affectionately known as Romneycare, ultimately served the model for the national plan. 

 

Roughly six years into the Massachusetts healthcare experiment, residents have had substantial time and experiences to answer the kinds of inquiries you may be asking about the national plan: Will my premiums increase? Will my employer drop my insurance? Will my taxes increase? Will I face longer waits to schedule or see my doctor?

 

As a small state with a robust economy, the most doctors per resident in the nation, and above-average health care spending, Massachusetts is not a perfect indicator for the country. Moreover, the laws are far from uniform, and the state only recently began addressing the costs of care. However, the experiences of Massachusetts residents can still offer plenty of advice regarding what to expect on January 1st and what you should do to prepare for the new law change. 

 

Even before the law took effect in 2007, only 8 percent of Massachusetts residents were without insurance. The requirements, along with subsidies that make policies affordable, decreased the state’s uninsured population down to 3 percent, the lowest in the nation. The nation as a whole is expected to fall short of this milestone: by 2017, roughly an estimated 10 percent of Americans will still go without health insurance, down from 16 percent today. With less generous under Obamacare and some states reusing to expand Medicaid offerings, more impoverished Americans may go without insurance. 

 

Also, workers at large firms that offer generous health care packages will see no changes to their plans. In Massachusetts, companies that employ fewer than 11 full-time workers can refuse to provide health insurance, while larger firms can opt out of the requirements by paying a fine of $295 per employee. From 2005 to 2011, the percentage of businesses with three or more workers that provide insurance increased from 70 to 76 percent, according to a Massachusetts employer survey. 

 

 

Source: whitehouse.gov

“When Internet users do not find their inquiries on Google, they think no one can find them; this is simply not true.”

 

This is according to John Matherly, the creator of Shodan, which is widely regarded as the scariest search engine on the Internet.  

 

Dissimilar to Google, which crawls the Web searching for websites, Shodan navigates the Internet’s back channels. Shodan is in essence a “dark” Google, looking for the printers, webcams, serves, routers and all the other things that is connected to and makes up the broader Internet. 

 

Shodan operates 24 hours a day, seven days a week to perpetually collect information on roughly 500 connected devices and services each month. 

 

Users and industry professionals claim Shodan offers stunning search results even from the basic of inquiries. Seemingly countless security cameras, home automation devices, traffic lights and heating systems are connected to Internet and easy to locate through a Shodan search. 

 

Shodan searches can find control systems for water parks, gas stations, and even a hotel wine cooler. Cyber security researchers were even able to locate command and control systems for nuclear power plants and particle accelerating cyclotrons by accessing Shodan. 

 

What is truly impressive about Shodan’s ability to locate all of these things, and the characteristic that makes Shodan so scary is that many of the aforementioned devices have legitimate security systems built into them. 

 

“You can access a scary amount of the Internet with a default passcode,” said HD Moore, the chief security officer of Rapid 7, which operates a private version of a database similar to Shodan for personal research purposes. 

 

A basic search for “default password” reveals countless serves, printers and system control devices that utilize “admin” as their user name and “1234” as their password. Several other connected systems require no credentials at all; for these systems all you would need is a Web browser that is connected to them. 

 

In a speech at last year’s Defcon cyber security conference, independent security penetration tester Dan Tentler revealed how he used Shodan to locate control systems for evaporative coolers, garage doors, and pressurized water heaters. 

 

Tentler located a car wash that be turned on and off and a hockey rink that could be defrosted with the click of a button. A city’s entire traffic control system was found to be connected to the Internet, allowing a hacker to put it into “test mode” with a single command entry. Tentler also located a control system for a hydroelectric plant in France with turbines generating over 3 megawatts each. 

 

“A hacker or evil person could really do some serious damage with this information and control,” Tentler said in a severe understatement. 

 

Source: CNN

 

Apple executives defended the tech giant’s tax strategy on Capitol hill today, claiming that the corporation pays one of the highest effective tax rates of any major company in the United States. 

 

A Senate panel called the hearing to investigate what committee leader’s claims was the company’s strategy of shifting income to an Irish subsidiary to avoid paying American taxes. Apple executives claim the money resided with its international operations, including those in Ireland, and not to avoid taxes because of the growth of the company’s sales overseas. 

 

Apple CEO Tim Cook said the tech company paid an effective tax rate of nearly 31 percent on profits it made on sales within the United States. Mr. Cook said the company paid over $6 billion in U.S. corporate taxes for the fiscal year of 2012 and expects to pay an even greater some this year.

 

“I am often asked if Apple still regards itself as an American company,” Cook said. “My answer will always be an emphatic yes. We are more than proud to be an American company, and equally proud of our contributions to the economy of the United States. 

Cook claimed that Apple has never considered moving its headquarters outside of the United States. “It is beyond my imagination, and I have a pretty crazy imagination,” Cook said. 

 

Carl Levin, chairman of the U.S. Senate’s Permanent Subcommittee on Investigations and John McCain both started the hearing with strong remarks of Apple’s practice of shifting income to foreign nations to avoid paying American taxes. 

Levin called Apple’s practice an utter “sham,” while McCain said that the company’s claim that its use of the Irish subsidiary did not diminish its U.S. taxes is “completely false.”

 

“American corporations cannot continue to avoid paying their share in taxes,” said McCain. “Our armed forces units cannot afford it, and our economy cannot endure it. Moreover, the American people will not tolerate it.” 

 

McCain asked Cook, “Can you see that there is a perception of an unfair advantage with what you do?”

 

In response, Cook said “honestly, I do not see it as being unfair; I am not an unfair person, and that is not who we are as a company.”

 

Cook claims that his company strongly supports corporate tax reform and that he was happy to testify at the hearing if it would advance the change of said reform being passed. 

 

 

Source: Internal Revenue Service